Conformed Copy - L3292 - Public Enterprise Reform Execution Project - Loan Agreement

Page 1 CONFORMED COPY LOAN NUMBER 3292-AR (Public Enterprise Reform Execution Project) between THE ARGENTINE REPUBLIC and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated April 8, 1991 LOAN NUMBER 3292-AR LOAN AGREEMENT AGREEMENT, dated April 8, 1991, between the ARGENTINE REPUBLIC (the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank). WHEREAS (A) by agreement of even date herewith (the PERAL Loan Agreement), the Bank has agreed to make a loan to the Borrower to assist in the financing of a program of actions, objectives and policies designed to achieve a structural adjustment of key sectors of the Borrower's Economy through, inter alia, the privatization and reform of public enterprises (the Program). (B) the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement which will support the execution of the Program, has requested the Bank to assist in the financing of the Project; WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to extend the Loan to the Borrower upon the terms and conditions set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Page 2 General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Loan and Guarantee Agreements" of the Bank, dated January 1, 1985, with the last sentence of Section 3.02 deleted (the General Conditions) constitute an integral part of this Agreement. Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (b) "Project Preparation Advance" means the project preparation advance granted by the Bank to the Borrower pursuant to an exchange of letters dated August 10, 1990 and August 17, 1990 between the Borrower and the Bank; (c) "Austral" and "A" means the currency of the Borrower; (d) "ENTel" means Empresa Nacional de Telecomunicaciones, the National Telecommunications Company; (e) "FA" means Ferrocarriles Argentinos, the Borrower's National Railway Company; (f) "AGP" means Administracion General de Puertos, the Borrower's port administration entity; (g) "ENCOTEL" means Empresa Nacional de Correos y Telecomunicaciones, the Borrower's Post Office and Telecommunications Company; (h) "OSN" means Obras Sanitarias de la Nacion, the Borrower's Water and Sanitation Company; (i) "CNT" means Comision Nacional de Telecomunicaciones, the National Telecommunications Commission; (j) "DNV" means Direccion Nacional de Vialidad, the National Highway Authority; (k) "ELMA" means Empresa de Lineas Maritimas Argentinas, the Borrower's National Shipping Company; (l) "FM" means Ferrocarriles Metropolitanos, the Metropolitan Railways Entity; (m) "GdE" means Gas del Estado, the Borrower's Gas Company; (n) "SEGBA" means Servicios Electricos del Gran Buenos Aires, the power distribution company of the Borrower for the Province of Buenos Aires; (o) "SIGEP" means Sindicatura General de Empresas Publicas, the Borrower's PE Comptroller; (p) "SOMISA" means Sociedad Mixta Siderurgica Argentina, the Steel Company of Argentina; (q) "YCF" means Yacimientos Carboniferos Fiscales, the Borrower's Coal Company; (r) "YPF" means Yacimientos Petroliferos Fiscales, the Borrower's National Petroleum Company; (s) "PE" means an enterprise or entity with independent patrimony and juridical personality of which a majority of the outstanding voting stock or other proprietary interest is owned or effectively controlled by the Borrower or any of its agencies; (t) "Eligible Activity" means a specific study or training program included under the Project which has been approved by the Bank for financing under the Loan; Page 3 (u) "Subsidiary Loan" means a loan made or proposed to be made by the Borrower to a PE, in terms and conditions satisfactory to the Bank, out of the proceeds of the Loan to finance the execution of an Eligible Activity; (v) "Subsidiary Loan Agreement" means an agreement entered or to be entered into by the Borrower and a PE providing for a Subsidiary Loan; (w) "MEC" means Ministerio de Economia, the Borrower's Ministry of Economy; (x) "MOSP" means Ministerio de Obras y Servicios Publicos, the Borrower's Ministry of Public Works and Services; (y) "SCC" means Subsecretaria de Combustibles, the fuels Subsecretariat under MEC; (z) "SST" means Subsecretaria de Transporte, the Sub-secretariat of Transport under MOSP; (aa) "SSE" means Subsecretaria de Energia Electrico, the Subsecretariat of Electric Energy under MEC; (bb) "Executing Agency" means any of the following MEC, SCC, SST, SSE or any other Secretariat or Subsecretariat agreed upon between the Borrower and the Bank, ENTEL, FA, YPF, GdE, CNT, ENCOTEL, SOMISA, ELMA, OSN, SEGBA, YCF, AGP, or any PE which has entered into a Subsidiary Loan Agreement for purposes of the Project, and "Executing Agencies" means two or more Executing Entities referred to collectively; (cc) "Account Bank" means the Borrower's Central Bank or any other bank established and operating in Argentina acceptable to the Bank; (dd) "Project Coordinating Unit" means the coordinating unit established pursuant to Resolution No. 50, of the Borrower's Subsecretaria de Empresas Publicas, dated November 28, 1990, to be maintained by the Borrower pursuant to Section 3.01 (b) of this Agreement; and (ee) "Management Service Contract" means the contract referred to in Section 3.02 of this Agreement. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Loan Agreement, various currencies that shall have an aggregate value equivalent to the amount of twenty-three million dollars ($23,000,000), being the sum of withdrawals of the proceeds of the Loan, with each withdrawal valued by the Bank as of the date of such withdrawal. Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan. (b) The Borrower shall, for the purposes of the Project, open and maintain in dollars a special deposit account in the Account Bank on terms and conditions satisfactory to the Bank, including appropriate protection against set off, seizure or attachment. Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 6 to this Agreement. (c) Promptly after the Effective Date, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and pay to itself the amount required to repay the principal amount of the Project Preparation Advance withdrawn and outstanding as of such date and to pay all unpaid charges thereon. The unwithdrawn balance of the authorized amount of the Project Preparation Advance shall thereupon be cancelled. Section 2.03. The Closing Date shall be June 30, 1995 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.04. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Page 4 Loan not withdrawn from time to time. Section 2.05. (a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time, at a rate for each Interest Period equal to the Cost of Qualified Borrowings determined in respect of the preceding Semester, plus one-half of one percent (1/2 of 1%). On each of the dates specified in Section 2.06 of this Agreement, the Borrower shall pay interest accrued on the principal amount outstanding during the preceding Interest Period, calculated at the rate applicable during such Interest Period. (b) As soon as practicable after the end of each Semester, the Bank shall notify the Borrower of the Cost of Qualified Borrowings determined in respect of such Semester. (c) For the purposes of this Section: (i) "Interest Period" means a six-month period ending on the date immediately preceding each date specified in Section 2.06 of this Agreement, beginning with the Interest Period in which this Agreement is signed. (ii) "Cost of Qualified Borrowings" means the cost, as reasonably determined by the Bank and expressed as a percentage per annum, of the outstanding borrowings of the Bank drawn down after June 30, 1982, excluding such borrowings or portions thereof as the Bank has allocated to fund: (A) the Bank's investments; and (B) loans which may be made by the Bank after July 1, 1989 bearing interest rates determined otherwise than as provided in paragraph (a) of this Section. (iii) "Semester" means the first six months or the second six months of a calendar year. (d) On such date as the Bank may specify by no less than six months' notice to the Borrower, paragraphs (a), (b) and (c) (iii) of this Section shall be amended to read as follows: "(a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time, at a rate for each Quarter equal to the Cost of Qualified Borrowings determined in respect of the preceding Quarter, plus one-half of one percent (1/2 of 1%). On each of the dates specified in Section 2.06 of this Agreement, the Borrower shall pay interest accrued on the principal amount outstanding during the preceding Interest Period, calculated at the rates applicable during such Interest Period." "(b) As soon as practicable after the end of each Quarter, the Bank shall notify the Borrower of the Cost of Qualified Borrowings determined in respect of such Quarter." "(c) (iii) `Quarter' means a three-month period commencing on January 1, April 1, July 1 or October 1 in a calendar year." Section 2.06. Interest and other charges shall be payable semiannually on March 1 and September 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement, and, to this end, shall carry out the Project through the Executing Agencies as described in the Annex to Schedule 2 to this Agreement, with due diligence and efficiency and in conformity with appropriate administrative, financial and management practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. (b) Without limitation upon the provisions of paragraph (a) of this Section, Page 5 the Borrower shall maintain in MEC, until the Closing Date, the Project Coordinating Unit with functions and responsibilities satisfactory to the Bank, including, inter alia, the following: (i) coordinate the execution of all parts of the Project; (ii) approve the procurement of goods and the selection of, and the terms of reference for, the consultants proposed by the Executing Agencies; (iii) review of all consultants' reports and provision of feedback to the National Project Director, the Executing Agencies and the Bank on their content and on the soundness of the consultants' recommendations; (iv) prepare semi-annual reports on the progress of the Project; and (v) make all necessary administrative arrangements for the timely procurement of goods and hiring of consultants required for the Project. (c) The Borrower shall ensure that the Project Coordinating Unit is at all times headed by a Secretary or Sub-secretary of MEC acceptable to the Bank, as National Project Director, assisted by a full-time Deputy Director with qualifications, experience and terms of reference satisfactory to the Bank, and by qualified staff in adequate numbers. (d) Without limitation upon the provisions of paragraph (a) of this Section and except as the Borrower and the Bank shall otherwise agree, the Borrower shall carry out the Project substantially in accordance with the Implementation Program set forth in Schedule 5 to this Agreement. Section 3.02. (a) Not later than April 30, 1991, the Borrower shall enter into contractual arrangements, satisfactory to the Bank, with an agent or agents acceptable to the Bank, for handling contracting of consultants, the procurement of goods and for arranging training activities under the Project. (b) The Borrower shall exercise its rights under the contractual arrangements referred to in paragraph (a) of this Section in such a manner as to protect the interests of the Borrower and the Bank and to accomplish the purposes of the Loan and, except as the Bank shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive such arrangements or any provision thereof. Section 3.03. (a) The Borrower shall: (i) carry out all studies included in the Project under terms of reference satisfactory to the Bank which, unless the Borrower and the Bank shall otherwise agree, shall include specific programs or plans of action to meet the objectives of the Project; (ii) promptly after the completion of each such study, furnish to the Bank copy of its findings and recommendations including such programs or plans of action; (iii) afford the Bank a reasonable opportunity to comment on such findings, recommendations and programs or plans of action; and (iv) where appropriate, and taking into account the Bank's comments thereon, prepare programs or plans of action to carry out the recommendations of such studies. (b) The Borrower undertakes to carry out such programs and plans of action as required to meet the objectives of the Project as set forth in Schedule 2 to this Agreement and the Program. Section 3.04. (a) The Borrower and the Bank shall semi-annually, starting not later than September 30, 1991 and on each March 31 and September 30, thereafter, and when requested by either party, exchange views on the progress achieved by each Executing Agency in carrying out their respective parts of the Project. (b) Not later than 15 days prior to each such exchange of views, the Borrower shall, through the Project Coordinating Unit, furnish to the Bank for its review and comment a report on the progress achieved by each Executing Agency in carrying out their respective parts of the Project, in such detail as the Bank shall reasonably request. Section 3.05. (a) Except as the Bank shall otherwise agree, procurement of the goods and consultants' services required for the Project and to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 4 to this Agreement. Page 6 (b) Public servants employed by the Borrower under any kind of administrative arrangements (including leave without pay) shall not be eligible for providing consulting services to be financed out of the proceeds of the Loan. (c) The Borrower shall maintain in the Executing Agencies qualified staff in adequate number as counterparts of the consultants employed under the Project. Section 3.06. (a) In order to finance the execution of specific Eligible Activities, the Borrower shall relend part of the proceeds of the Loan to the PEs executing them in amounts and terms and conditions which shall have been approved by the Bank. (b) Without limitation to the provisions of Section 3.01 of this Agreement, the Borrower, under the respective Subsidiary Loan Agreement, shall cause the PE: (i) to carry out the Eligible Activity with due diligence and efficiency and in accordance with appropriate practices; (ii) to provide promptly as needed the funds, facilities, services and other resources required for such purposes; and (iii) to comply with all the obligations related to procurement, auditing and exchange of views and information set forth or referred to in this Agreement with respect to the Eligible Activity to be financed out of the proceeds of the Loan. (c) Each Subsidiary Loan shall be denominated in dollars and repayable in Australes and shall carry the same financial terms and conditions applicable to the Loan. (d) The Borrower shall exercise its rights under the Subsidiary Loan Agreements in such a manner so as to protect the interests of the Borrower and the Bank, and to accomplish the purposes of the Loan, and, except as the Bank shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive any Subsidiary Loan Agreement or any provision thereof. ARTICLE IV Financial Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained separate records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of the Project of the departments or agencies of the Borrower (including the Executing Agencies and the Account Bank) responsible for carrying out the Project or any part thereof. (b) The Borrower shall: (i) have the records and accounts referred to in paragraph (a) of this Section for each fiscal year audited, in accordance with appropriate auditing principles consistently applied by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than four months after the end of each such year, the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning said records and accounts and the audit thereof as the Bank shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were made on the basis of statements of expenditure, the Borrower shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Bank has received the audit report for the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Bank's representatives to examine such records; and Page 7 (iv) ensure that such records and accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. ARTICLE V Remedies of the Bank Section 5.01. Pursuant to Section 6.02 (k) of the General Conditions, the following additional events are specified, provided, however, that if any event referred to in paragraphs (a) or (b) shall affect the execution of only part or parts of the Project and be continuing, the suspension of the Borrower's rights to make withdrawals from the Loan Account may be limited by the Bank to the amounts utilized or to be utilized to finance the execution of the Part or Parts of the Project affected by such event: (a) that the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment or the suspension of the operations of any Executing Agency; and (b) that an Executing Agency shall have failed to perform any of its obligations under a Subsidiary Loan Agreement. Section 5.02. Pursuant to Section 7.01 (h) of the General Conditions, the following additional events are specified, namely, that the event specified in paragraphs (a) or (b) of Section 5.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) that the Project Coordinating Unit shall have been staffed in a manner satisfactory to the Bank; (b) that all conditions precedent to the effectiveness of the PERAL Loan Agreement have been fulfilled, subject only to the effectiveness of this Agreement. Section 6.02. The date July 8, 1991 is hereby specified for the purposes of Section 12.04 of the General Conditions. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Ministro de Economia of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministerio de Economia Hipolito Yrigoyen 250 Buenos Aires Argentina Cable address: Telex: MINISTERIO ECONOMIA 121952 AR Page 8 Baires For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 197688 (TRT) Washington, D.C. 248423 (RCA) 64145 (WUI) or 82987 (FTCC) IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. THE ARGENTINE REPUBLIC By /s/ Carlos Ortiz de Rosas Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Pieter P. Bottelier Acting Regional Vice President Latin America and the Caribbean SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditurea Category Dollar Equivalent) to be Financed (1) Consultants' 21,450,000 100%, net of taxes services and training (2) Goods 800,000 100% of foreign expenditures and 85% of local expenditures (3) Refunding of 750,000 Amounts due pur- Project Prepara- suant to Section tion Advance 2.02 (c) of this Agreement Page 9 TOTAL 23,000,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower or for goods or services supplied from the territory of the Borrower. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) payments made for expenditures prior to the date of this Agreement, except that withdrawals, in an aggregate amount not exceeding the equivalent of $500,000, may be made on account of payments made for expenditures before that date but after July 1, 1990; (b) expenditures by a PE until the Bank shall have received a duly certified copy of the Subsidiary Loan Agreement for the Eligible Activity in question, entered into by such PE together with an opinion or opinions satisfactory to the Bank of counsel acceptable to the Bank showing, on behalf of the Borrower and the PE that the respective Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of the PE and the Borrower and is legally binding upon the parties thereto in accordance with its terms; (c) expenditures under Part C of the Project, made on or after January 1, 1994, or such later date as the Bank shall have determined, until the Bank shall have disbursed the funds allocated to Category (2) of the table set forth in paragraph 1 of Schedule 1 of the Loan Agreement entered into between the Borrower and the Bank, for the Public Enterprise Reform Adjustment Loan (hereinafter the "PERAL Loan Agreement"); and (d) expenditures under Part D of the Project, made on or after January 1, 1994, or such later date as the Bank shall have determined, until the Bank shall have disbursed the funds allocated to Category (3) of the table set forth in paragraph 1 of Schedule 1 of the PERAL Loan Agreement. SCHEDULE 2 Description of the Project The objectives of the Project are to assist in the implementation of the Program by supporting: (a) the total or partial privatization of four major PEs in Argentina as well as improving the financial viability and service quality of their non-privatized business units; (b) the preparation of further privatization programs; and (c) the strengthening of the institutional and regulatory framework for the sectors in which PEs and privatized entities operate. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Bank may agree upon from time to time to achieve such objectives: Part A: PE Reform Framework A program to strengthen the Borrower's administrative capabilities to plan, execute and monitor the privatization and/or restructuring of PEs, including: (i) the establishment of a coordinating unit in MEC to lead, plan and monitor the execution of the Program; (ii) the establishment and implementation of a strategic plan for MEC to strengthen the Borrower's program for the privatization and/or restructuring of PEs, which includes the upgrading of existing management information systems of PEs and SIGEP; (iii) development and implementation of a labor management strategy aimed at improving labor productivity in PEs; (iv) the strengthening of the Borrower's capabilities to monitor and reduce adverse environmental effects of the activities of PEs and private companies particularly in the oil and gas, railway and telecommunication sectors; and (v) development and execution of privatization and/or restructuring plans for ELMA, AGP, ENCOTEL, OSN, SEGBA, DNV, AyEE and other specific PEs agreed upon between the Borrower and the Bank. Part B: Telecommunications Sector Reform A program to privatize and restructure the telecommunications sector including: Page 10 (i) the conclusion of the privatization of ENTel and (ii) the establishment and initial operation of a National Telecommunications Commission to regulate and monitor sector activities in order to ensure competitive behavior and compliance with concession and service obligations by private operators. Part C: Railways Sector Reform A program to privatize and restructure the railways sector, including: (i) strengthening of FA capabilities to develop and implement a restructuring and privatization program; (ii) analysis and identification of railway cargo concession options and development and execution of related action plans; (iii) development and execution of an action plan for restructuring interurban passenger services; (iv) analysis and identification of privatization options for internal service activities now provided by FA; (v) development and execution of an action plan to franchise FA rolling stock; (vi) establishment and initial operation of an asset management unit in FA to survey non-transport related FA assets and to prepare and execute plans for the development or sale of such assets; (vii) establishment and initial operation of a railway employee management unit to assist FA's management in the restructuring of its labor force; (viii) development and execution of plans to restructure metropolitan services including the establishment of an independent railway company under local government control and financing and the development of accounting and insurance systems for such company; (ix) development of new safety and operating rules and practices for railway activities; and (x) development of a new regulatory framework for the national railway system (including Buenos Aires metropolitan passenger services) to ensure competitive behavior by operators, adequate environmental safeguards and efficient interconnection of transport services. Part D: Oil and Gas Sector Reform A program to restructure the organization and operation of the oil and gas sectors, including: (i) development and execution of a strategic plan defining the long-term objectives of YPF after the restructuring and divestiture of parts of its organization and activities including establishment of new business units; (ii) privatization and/or establishment of joint ventures of selected YPFs upstream and downstream operations and transport services; (iii) privatization of the gas transport and distribution facilities of GdE; and (iv) strengthening and development of the Borrower's regulatory capabilities in the oil and gas sector to ensure competitive behavior and compliance with concession and service obligations by private operators and application of adequate safety, operational, environmental and marketing procedures. * * * The Project is expected to be completed by December 31, 1994. ANNEX TO SCHEDULE 2 Arrangements for the Execution of the different Parts of the Project Part of the Project Executing Agencies Part A (i) MEC Part A (ii) MEC/SIGEP Part A (iii) MEC Part A (iv) MEC Part A (v) MEC/SSE/Applicable PEs Part B (i) MEC/CNT/ENTel Part B (ii) MEC/CNT Part C (i) through C (ix) MEC/SST/FA Part C (x) MEC/SST Part D (i) MEC/SCC/YPF Page 11 Part D (ii) MEC/SCC/YPF Part D (iii) MEC/SCC/GdE Part D (iv) MEC/SCC SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each March 1 and September 1 beginning September 1, 1996 through September 1, 2007 960,000 and on March 1, 2008 920,000 _____________________________ * The figures in this column represent dollar equivalents determined as of the respective dates of withdrawal. See General Conditions, Sections 3.04 and 4.03. Premiums on Prepayment Pursuant to Section 3.04 (b) of the General Conditions, the premium payable on the principal amount of any maturity of the Loan to be prepaid shall be the percentage specified for the applicable time of prepayment below: Time of Prepayment Premium The interest rate (expressed as a percentage per annum) applicable to the Loan on the day of prepayment multiplied by: Not more than three years 0.18 before maturity More than three years but 0.35 not more than six years before maturity More than six years but 0.65 not more than eleven years before maturity More than eleven years but not 0.88 more than fifteen years Page 12 before maturity More than fifteen years 1.00 before maturity SCHEDULE 4 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A: International Competitive Bidding Except as provided in Part C hereof, goods shall be procured under contracts awarded in accordance with procedures consistent with those set forth in Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in May 1985 (the Guidelines). Part B: Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A hereof, goods manufactured in Argentina may be granted a margin of preference in accordance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraphs 1 through 4 of Appendix 2 thereto. Part C: Other Procurement Procedures 1. Goods estimated to cost less than the equivalent of $25,000 per contract, up to an aggregate amount not to exceed the equivalent of $100,000, may be procured under contracts awarded on the basis of comparison of price quotations solicited from a list of at least three suppliers or contractors eligible under the Guidelines, in accordance with procedures acceptable to the Bank. 2. Goods estimated to cost the equivalent of $25,000 or more but not exceeding the equivalent of $250,000, up to an aggregate not exceeding the equivalent of $700,000, may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Bank. Part D: Review by the Bank of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract for goods estimated to cost the equivalent of $25,000 or more, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract required to be furnished to the Bank pursuant to said paragraph 2 (d) shall be furnished to the Bank prior to the making of the first payment out of the Special Account in respect of such contract. (b) With respect to each contract not governed by the preceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, said procedures shall be modified to ensure that the two conformed copies of the contract together with the other information required to be furnished to the Bank pursuant to said paragraph 3 shall be furnished to the Bank as part of the evidence to be furnished pursuant to paragraph 4 of Schedule 6 to this Agreement. (c) The provisions of the preceding subparagraph (b) shall not apply to contracts on account of which the Bank has authorized withdrawals on the basis of statements of expenditure. 2. The figure of 10% is hereby specified for purposes of paragraph 4 of Appendix 1 to the Guidelines. Section II. Employment of Consultants In order to assist the Borrower in the carrying out of the Project, the Borrower shall employ and cause each Executing Entity to employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Bank on the basis of the "Guidelines for Page 13 the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. SCHEDULE 5 Implementation Program Start not Completion Part of the Project later than not later than Part A (iii) ______________* June 30, 1991 Part A (iv) June 30, 1991 March 30, 1993 Part B (ii) April 30, 1991 April 30, 1993 Part C (ii) June 30, 1991 June 30, 1992 Part C (iii) July 31, 1991 December 31, 1991 Part C (vii) _____________* December 31, 1993 Part C (viii) September 30, 1991 September 30, 1992 Part C (x) September 30, 1991 March 31, 1993 Part D (i) April 30, 1991 March 31, 1992 Part D (ii) April 30, 1991 March 31, 1993 Part D (iii) April 30, 1991 October 31, 1992 Part D (iv) June 30, 1991 March 31, 1992 __________________________ * Already in execution. SCHEDULE 6 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means the Categories (1) and (2) set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Loan allocated from time to time to the eligible Categories in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to $250,000 to be withdrawn from the Loan Account and deposited into the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Payments out of the Special Account shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Bank has received evidence satisfactory to it that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the Special Account shall be made as follows: (a) for withdrawals of the Authorized Allocation, the Borrower shall furnish to the Bank a request or requests for a deposit or deposits which do not exceed the aggregate amount of the Authorized Allocation. On the basis of such request or requests, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and deposit in the Special Account such amount or amounts as the Borrower shall have requested. (b) (i) For replenishment of the Special Account, the Borrower shall furnish to the Bank requests for deposits into the Special Account Page 14 at such intervals as the Bank shall specify. (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Bank the documents and other evidence required pursuant to paragraph 4 of this Schedule for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and deposit into the Special Account such amount as the Borrower shall have requested and as shall have been shown by said documents and other evidence to have been paid out of the Special Account for eligible expenditures. All such deposits shall be withdrawn by the Bank from the Loan Account under the respective eligible Categoryaies